By Michael Eboh
The new Petroleum Industry Bill, 2020, currently before the National Assembly, is proposing the revocation of licences for oil and gas firms that fail to meet up with their obligations to their host communities.
The power to revoke the licence of the defaulting firms was given to the Minister of Petroleum, upon the recommendation of the Nigerian Upstream Regulatory Commission, among other powers.
The bill defines host community as “any community situated in or appurtenant to the Area of Operation of a Settlor, and any other community as a Settlor may determine.”
According to the bill, any oil and gas company that fails to incorporate the Host Communities Development Trust shall have its license revoked.
It stated that on its constitution, the Host Communities Development Trust would be empowered to manage and supervise the administration of the annual contribution of the settlor (the oil company) contemplated under the Act and any other sources of funding.
The bill explained that the objectives of the host community development trust shall include to finance and execute projects for the benefit and sustainable development of the host communities; undertake infrastructural development of the host communities within the scope of funds available to the Board of Trustees for such purposes; and facilitate economic empowerment opportunities in the host communities, among others.
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Other powers granted the Minister of Petroleum in the new bill, include the revocation and assignment of interests in the petroleum industry; approve the fees for services rendered by the upstream, midstream and downstream regulatory authorities; and order a cutback of the levels of crude oil or condensate production in the context of international oil pricing agreements supported by Nigeria.
The minister is also empowered to, upon the recommendation of the Nigerian Upstream Regulatory Commission, or the Nigerian Midstream and Downstream Petroleum Regulatory Authority, direct in writing the suspension of petroleum operations in any area.
The suspension, the bill stated would persist until arrangements to prevent danger to life or property have been made to his satisfaction, or where in his opinion, a contravention of the Act or any regulation made under the Act has occurred or is likely to occur.
The bill also mandates the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority to keep proper accounts of its income and expenditure for each financial year and cause it to be audited within six months after the end of each financial year by auditors appointed by the Commission from a list and in accordance with guidelines, supplied by the Auditor-General for the Federation.
For the Nigerian Upstream Regulatory Commission, the Bill said: “The Commission shall submit to the Minister – a mid-year report of its operations and finances not later than the 31st of August of each year; an annual report of its operations and performance; and an audited financial account for the year, not later than 31st of March of the following year.
“The Commission shall, not later than the 31st of March of each year – submit to the Minister a summary of its annual report and audited financial accounts; and publish the annual report and audited financial accounts on its website.”
The bill is also proposing the setting up of a Midstream Gas Infrastructure Fund, which it said, shall be a “body corporate with perpetual succession and a common seal; and reside in the Authority as prescribed in accordance with this Act.
“The Midstream Gas Infrastructure Fund shall have the power to acquire, hold and dispose of property, sue and be sued in its corporate name.”
